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Chidambaram unveils measures to lure people from gold

New Delhi, Feb 28, 2013, (IANS):

Finance Minister P. Chidambaram Thursday announced measures to encourage people to make productive investments in financial markets and housing, instead of just putting their money in gold.

“The household sector must be incentivised to save in financial instruments rather than buy gold,” Chidambaram said while presenting the national budget for 2013-14.

The finance minister announced liberalisation of the Rajiv Gandhi Equity Savings Scheme (RGESS), with a view to make it more attractive to the common people.

First time investors will now be allowed to invest in mutual funds as well as listed shares. This investment can be done not in one year alone, but in three successive years. The income limit is raised from Rs.10 lakh to Rs.12 lakh.

To protect savings and investments form inflation, Chidambaram announced the issue of inflation-indexed funds.

“In consultation with RBI, I propose to introduce instruments that will protect savings from inflation, especially the savings of the poor and middle classes,” the finance minister said.

These could be inflation-indexed bonds or inflation-indexed national security certificates.

“The structure and tenor of the instruments will be announced in due course,” he said. Chidambaram also announced tax incentives to encourage investments in the housing sector.

He said any person taking a first time home loan up to Rs.25 lakh during the financial year 2013-14 will be allowed an additional tax deduction of interest of up to Rs.1 lakh.“This will promote home ownership and give a fillip to a number of industries like steel, cement, brick, wood, glass etc, besides jobs to thousands of construction workers,” he said.